Kuala Lumpur: The ringgit opened higher against a weakening US dollar as US President Donald Trump, in his inauguration speech, avoided announcing new tariffs, particularly on China. At 8 am, the ringgit traded at 4.4650/4815 against the greenback, up from Monday's close of 4.4910/4960.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid noted that the US Dollar Index (DXY) fell 1.16 percent to 108.082 points following the inauguration speech. He highlighted that there was no specific mention of tariff hikes against China. The Wall Street Journal reported that President Trump plans to issue a broad memorandum directing federal agencies to review existing trade policies and relationships with China, Canada, and Mexico. Dr Mohd Afzanizam suggested that while tariffs might be forthcoming, the approach seems methodical.
Dr Mohd Afzanizam also pointed out that the 47th US President's focus will be on domestic policies, with an emphasis on pro-growth initiatives. He mentioned that the financial markets could experience some relief, at least temporarily, which would provide a boost to the ringgit. Despite this, traders and investors are expected to remain cautious.
UOB Kay Hian Wealth Advisors head of investment research, Mohd Sedek Jantan, emphasized that Trump's directive for federal agencies to review existing policies indicates a more measured stance rather than a complete refrain from new tariffs. He noted that Trump's trade team is yet to be confirmed, suggesting that policy details are still under development. While there is no immediate impact, future trade developments are highly probable.
Meanwhile, Sedek observed that the Asia Dollar Index rose to 89.7446 in early trading before stabilizing at 89.6895, pointing to further strength for the ringgit against the US dollar. At the opening, the ringgit depreciated against major currencies, sliding against the euro, British pound, and Japanese yen.
The ringgit traded mostly higher against ASEAN currencies, climbing against the Thai baht, strengthening against the Indonesian rupiah, and edging up against the Philippine peso. However, the local unit fell against the Singapore dollar, trading lower compared to Monday's rates.